“Essar tapes are a lethal exposé of Corp/political nexus & crony Cap. Will govt view it only as illegal phone tapping?” tweeted Prashant Bhushan, the noted Supreme Court lawyer, on the least discussed phone-tapping scandal in the country. Although I am not among the journalists chosen for the ‘Essar-tape leaks’, I have a very direct interest in the answer. I learnt from Outlook magazine that my three landline numbers (I did not own a mobile phone during that time), and several numbers of Debashis Basu, were probably tapped. This is not really a surprise since the Essar group had filed a criminal defamation case in Surat against me and the Indian Express newspaper where I frequently wrote about the group’s continuous restructuring of loans and diversion of funds for its rapid expansion from shipping to steel, oil, telecom and finance.

My articles were, invariably, based on reports of the inter-institutional committee meetings (IICM) led by the Industrial Development Bank of India (IDBI). GP Gupta was the IDBI chairman then, and I remember meeting him to say that I would ensure that IDBI was made to testify in the case. Strangely, the case itself went nowhere after a few hearings. Earlier, when I was at The Times of India, Essar had mounted incredible pressure to stop my articles before a mega public issue of Essar Oil in the mid-1990s. Interestingly, I had also been warned that my phones were tapped and had made some inquiries; but that is a separate story.

Journalists privy to the leak, and a section of the social media, are justifiably outraged about the lack of mainstream media coverage on the Essar-tapes. Well, the issue is over a decade old and has come up rather suspiciously when the National Democratic Alliance (NDA) is back in the saddle. Also, the Essar-tapes no longer have the same ‘shock and awe’ quotient as the Niira Radia tapes, which exposed the hypocrisy of some head honchos of the bluest of the corporates involved in the 2G spectrum and coal allocation scams.

The ministry of home affairs has said it is seeking a legal opinion on the Essar-tapes. Even if it chooses to act, it may take the form of a leisurely investigation, unless the courts deliver a jolt and hasten things up. But things are not going any better in the court hearings either, with two judges having recused themselves from the case. Now, there are three aspects to the Essar-tapes that need discussion.

• First, the explosive stuff that is on the tapes, which shows how large corporate houses with financial muscle were practically running the government by controlling policy-making, appointments of ministers, investigation by the joint parliamentary committee (JPC) and government decisions.

• Second, the breezy nonchalance with which Essar was able to tape conversations of its rivals and government officials soon after telecom was opened to the private sector, and the implications this has for privacy as well as national security. How responsibly will large private sector companies behave in the already controversial and murky area of defence manufacturing?

• Third, the need to put in place appropriate system checks, audits and effective supervision to control rogue corporates and corrupt government officials who are in cahoots with them.

Let’s first summarise what is in the public domain on the Essar-tapes so far. Between 2001 and 2011 (or 2002 to 2006, according to some media houses), the Essar group allegedly tapped the phones of industrialists, politicians, senior Reliance group officials, bankers, bureaucrats and journalists. Essar has asserted that it has nothing to do with the tapes; but clearly nobody is buying it.

The tapes surfaced in June 2016 when Suren Uppal, a Delhi lawyer, sent the prime minister (PM) a list of 20 transcripts and sought an investigation. He claimed that he had them from his ‘client’ Albasit Khan, who headed security and vigilance at the Essar group.

Mr Uppal reportedly said that the phone-taps and recordings were done at the Essar headquarters through a series of SIM cards and under the direct supervision of Ruia family members. He has also filed a public interest litigation seeking a court-monitored investigation.

Albasit Khan has, however, disassociated himself from Mr Uppal and claimed that the tapes were given to him by Mumbai’s encounter specialist Vijay Salaskar who died in the Mumbai terror attack in 2008. The Mumbai police commissioner has unequivocally denied this. My sources in the telecom industry are amused at Mr Khan’s portrayal as a whistleblower by the media.

Prominent among those whose lines were allegedly tapped are the entire top brass of Reliance, Mukesh Ambani, Anil Ambani, Tina Ambani, Satish Seth and a few others. Politicians include Amar Singh, Kirit Somaiya, Pramod Mahajan, Praful Patel, Suresh Prabhu, Ram Naik, Jaswant Singh, Piyush Goyal, Sudhanshu Mittal and Ranjan Bhattacharya (Atal Bihari Vajpayee’s foster son-in-law); bureaucrats include Rajiv Mehrishi and Vinod Dhall, and bankers include IDBI’s PP Vora, KV Kamath and Lalita Gupte (then with ICICI). While this may not be a complete list, the names missing from it are rather more curious than those tapped, since it suggests that the Essar group did not need to worry about them.

The allegations, so far, are that the Ambanis worked to keep Pramod Mahajan in the union telecom ministry and to get him out of trouble in the murder of journalist Shivani Bhatnagar. Information about Reliance’s ability to influence policy and its equation with Pramod Mahajan is already in the public domain, partly since brothers Anil and Mukesh Ambani were washing the family’s dirty linen in public and partly through the Niira Radia tapes. What is less known is how Amar Singh allegedly helped cover up a JPC investigation into the Advanced Lending and Borrowing Mechanism (a sort of badla trading at the National Stock Exchange—NSE) after the Ketan Parekh scam. The Ambanis had invested over Rs1,900 crore in the NSE’s trading mechanism and withdrew it abruptly in seven days. This was neatly buried in the JPC report and a few heads that rolled at the Exchange and SEBI (Securities and Exchange Baord of India) were also given a very gentle treatment.

Although the social media is outraged about the manipulation of business, the bigger worry, to my mind, is the implications for national security, if the phones of so many powerful people, right up to the PM, the national security advisor and economically important business groups could be tapped with such impunity. How come was there no intel from the Intelligence Bureau (IB) on this? Again, one recording suggests that IB officials were also compromised, as were others in government who supported the group’s massive, non-stop bank borrowing.

My inquiries reveal that powerful phone-tapping equipment was imported by several agencies under fictitious nomenclatures. Some of it was also lying unclaimed at the Nhava Sheva port for a long time during 1999-2000. At some point, the government ordered that all such equipment should be dismantled and destroyed. But typical of India, this did not happen.

While we would all like to see action on the criminal manipulation revealed by the content of the Essar-tapes, I, for one, would first want the PM to put the best and most honest people on the job to ensure that our national interest and national security is not compromised by all the pervasive corruption that is part of our everyday lives and has only increased since the period covered in Essar-tapes.

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Mahesh S Bhatt

Hemant Chitale

5 months ago

Yes, the security implications are frightening. Is Essar still (in 2016) tapping lines ? Are there other players tapping the lines of corporate bigwigs, ministers and senior bureaucrats ? Who knows .... Essar may be the only one to have been caught.

Midas Touch Investors' Association (Midas Touch), a well-known investor organisation, has requested market regulator Securities Exchange Board of India (SEBI) to disgorge all assets of 692 companies, identified as 'vanishing companies' by regional stock exchanges (RSEs) and of their promoters. In addition, Midas Touch also requested SEBI to issue restraint orders to stop further siphoning or diversion or embezzlement of all the assets of vanishing companies which were exclusively listed on RSEs.

"According to our estimates, out of 5,100 companies exclusively listed at 22 RSEs, about 50% or around 2,500 may have vanished. This is an astounding percentage and number without any parallel in any stock exchange of the world. This was possible only because throughout its tenure SEBI remained a wilful defaulter in monitoring companies listed at stock exchanges, which paved way for predatory promoters to loot small shareholders without fear of any law," the investor organisation said.

In a letter to SEBI Chairman UK Sinha, the investor organisation, says, "SEBI should invoke penal provisions under section 15HA of SEBI Act for fraudulent and unfair trade practices against promoters, chartered accountants and all those persons who aided and abetted in such a heinous crime. Besides refund of money and assets, we feel strongly that they should be prosecuted and put behind bars by the Court as an exemplary and deterrent punishment."

These 692 vanishing companies were identified by the RSEs during the course of stock exchanges de-recognition exercise, and their names put up on dissemination board of National Stock Exchange (NSE) and BSE as required by SEBI's guidelines.

The 10 RSEs identified 692 vanishing companies. Ahmedabad Stock Exchange had the highest number of vanishing companies at 416, followed by Vadodara Stock Exchange at 121 and Guwahati Stock Exchange at 57.

According to Midas Touch, the identification of 692 vanishing companies by 10 defunct RSEs also lays bare the hollowness of Co-ordination and Monitoring Committee (CMC). "Till now, CMC has identified 78 vanishing companies as per the list put out by the Ministry of Corporate Affairs (MCA) against 692 identified by the RSEs," it added.

CMC was formed in 1999 to identify companies that have disappeared or have mis-utilised the funds mobilised from public and take penal action against their promoters and directors.

Even the Allahabad High Court, in an order passed while hearing a public interest litigation (PIL) filed by Midas Touch, has directed the government and regulators to take action against defaulting companies and their directors and promoters.

"Besides this the defaulting companies and their Directors and Promoters will also be subjected to penal consequences under the provisions of the Indian Penal Code and the defaulting companies can also be subjected to proceedings under the Companies Act. At this juncture we may hope and trust that the opposite parties would abide by the decisions taken by them and would bring to notice the names of the defaulting companies as envisaged in the Supplementary Affidavit," the HC had said.

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manoharlalsharma

5 months ago

thanks for 'MIDAS' to appeal to SEBI for seizure of properties and auction and get money back to small investors.

Despite the intended focus on low-income population, the bulk of which resides in rural areas, the loan portfolio of non-banking microfinance companies that touched an all-time high last year, is heavily skewed in favour of India's urban quarters, fresh data shows.

According to Sa-Dhan, an association of microfinance institutions, within the loan portfolio of Rs60,328 crore in 2015-16, only 28% or Rs16,892 crore, went to the rural economy, with urban and semi-urban areas accounting for 72% or Rs43,436 crore.

In the previous year, rural exposure was 30%.

"Demand for the rural loaning is of very low volumes," P. Satish, Executive Director of Sa-Dhan, told IANS, adding credit in the hinterland was is failing to pick up due to limited geographic reach of these finance companies.

"If the institutions have to give more credit in rural areas, they need a wider network. Even rural area-focused institutions have their office in semi-urban or urban areas. In urban areas, especially, they have a wider geographical reach,” Satish said.

“Moreover, the demand for rural credit is mainly for agricultural loans, which under Centre's various 'krishi' schemes are better catered by banks at a lower interest rate."

Microfinance institutions give small loans to entrepreneurs with an income limit of Rs100,000 and Rs160,000 respectively in rural and urban areas with a cap on the indebtedness at Rs100,000.

Microfinance Institutions Network, a self-regulatory organisation for the sector established in October 2009, that has a target of providing financial services to 100 million low income households by 2020 feels there are some regulatory issues as well that need to be addressed.

“There has been a continuous policy dialogue with the Reserve Bank of India on several policy issues, mainly on microfinance institutions and broader financial inclusion,” said Ratna Vishwanathan, Chief Executive of the network.

“The amount of loan portfolio in rural areas is very less compared to the urban areas, which may be a concern -- it, in fact, fell in 2015-16,” Oscar Martins, Director of Financial Services with Protiviti, told IANS.

“Migration to urban areas is increasing fast and many of these migrants are also microfinance clients,” added Satish, giving another reason why the loan portfolio is skewed in favour of urban areas.

“Despite the talk of universal financial inclusion, as long as there is a demand for small, unsecured loans at the lower end of the economic levels, there will be an expansion of the portfolio of micro-finance institutions in urban and semi-urban areas."

Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.